When does being 'early' make you 'wrong'?
Courtesy of Paul Price
Originally published at Guru Focus.
Does being 2.5 years early mean being wrong?
The latest issue of Forbes magazine chose to feature a duo of money managers that have failed miserably since they took their Ranger Equity Bear ETF (HDGE) public in January of 2011. The ticker symbol is cute. The article is titled…
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A version of this story first ran on forbes.com on June 26, 2013. The bearish suggestion came after a five-week pullback had turned most media outlets negative. Highlighting a 100% bearish play following a big decline was, as things turned out, a great contrary indicator.
This two-month chart of the S&P 500 ETF tells the story.
[ Enlarge Image ]http://www.forbes.com/sites/baldwin/2013/06/26/is-a-short-seller-after-your-stock/
Columnist William Baldwin did note that the fund had lost a lot of value since inception but suggested that sometime soon it might make a good play. The fund bets 100% on the bear side of the market which was a terrible place to be over the past 2.5 years.
Baldwin figured that the higher prices for the shorted stocks might lead to a big correction whenever some actual bad news besets them. HDGE is an actively managed ETF. It charges a higher than typical, for ETFs 1.5% annual management fee. The fund incurs charges for borrowing the shares they short. Any dividends earned by the underlying shares must be paid by HDGE shareholders.
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What did HDGE shareholders get for their money?
(Hint: it isn't pretty)
Full article: When does being 'early' make you 'wrong'? - GuruFocus.com.
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